Mark Steward @ FCA makes four practical observations about the Senior Manager’s Regime.

1. First, the duty of responsibility does not create a separate and independent basis for senior management liability. A senior manager’s liability, under the duty of responsibility, depends on the firm’s wrongdoing because it is, in essence, a duty to act reasonably as a manager to prevent the firm from contravening a relevant requirement. This means any action involving the duty of responsibility will give rise to a need consider whether action needs to be taken against the firm as well as against the senior manager.
2. Secondly, a senior manager is not liable just because the firm has breached a requirement. The senior manager’s liability arises because he or she has failed to take reasonable steps to prevent the firm from being in breach and the firm is in breach. In other words, the regime is not intended to make senior managers vicariously or strictly liable for misconduct that occurs within or by the firm. The senior manager is not a proxy or a scapegoat for the firm or anyone else.
3. Thirdly, the requirement to prove a failure to take reasonable steps will no doubt invite arguments that the management failure must have caused the firm to be in breach. I see an argument the other way of course as well. By the same token, the relevant breach by the senior manager must be one where it can be said the management failure is a factor in the corporate breach.
4. Fourthly, the relevant duty applies not only to acts but also to omissions. Accordingly, a failure to act, which may include a failure to know what a senior manager ought reasonably to be cognisant of, may be enough to constitute a breach.

The Senior Managers Regime marks a decisive and positive shift in the on-going challenge to improve not only firm behaviour but also how those entrusted with senior management responsibilities perceive the nature of those obligations and the consequences when they are not met.

Read the full speech @ http://bit.ly/2o9MahT